Youth Month
Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. It is one of life’s most important subjects, yet it is often overlooked and barely touched on in schools, if talked about at all. The month of April is National Credit Union Youth Month! This month, not only are we focusing on financial literacy for kids, but we are also giving gifts out to kids when you visit any of our branches!
Financial Tips to Teach Your Children
While it may seem early to start teaching your kids about finances, they must learn sooner than later. Having a firm grasp on financial basics will be extremely beneficial to them when they have to learn more complex financial topics later in life.
Help your child to understand the difference between wants and needs. This will help them better prioritize their spending as they will understand what unnecessary spending is. Including your children in the financial decision-making process can help them better understand the choices of “wants” versus “needs.” An example of prioritizing spending would be if you were looking to buy a car. Instead of choosing the fancy, brand-new SUV, you decide to go with the used minivan because it has good gas mileage and holds more people. When making these choices, be sure to share with your children your choice so they can learn financial basics.
Sometimes, it can be hard for younger children to fully grasp what money is. That’s where teaching them about opportunity cost can be beneficial! Opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen. Instead of saying “You can buy this new video game, but it will cost you $60,” say “If you buy this new video game, you won’t be able to buy the new pair of shoes you wanted.” This will instill that money is more than just a numeric value assigned to something.
Developing Good Habits
Building good financial habits as a child can lead to building financially responsible adults. Research has shown that kids develop money habits before the age of 7 . Therefore, it is so important to begin teaching your kids simple money habits as soon as they are old enough.
Teach your kids that money is not just for spending – it’s also for saving! Teaching your kids about saving money will also teach them about discipline and setting goals. They will also experience and understand delayed gratification when they hit their goals.
In addition, it is also important for kids to realize that “money doesn’t grow on trees,” and eventually, they will have to earn it. One way to do this is by giving your kids an allowance when they complete extra tasks around the house, at school, or in the community.
Money Tips Every Teen Should Know
For many people, the teenage years are a very formative time in your life. This age is when you start having more freedoms, as well as more responsibilities. Many people start their first job when they are still a teenager in high school. With a new source of income, it can be very easy (and very expected) for someone who is new to managing their own finances to make plenty of “money mistakes.” While it is important for teenagers to have some freedom with their money, there are still some very beneficial tips that you can teach your teen to help them navigate their new financial responsibilities.
A great way to get your teen (or even yourself) started is to set up a percentage of their paycheck to automatically go into a savings account. This is a great trick for any age since the money never goes into your checking account it is not missed. This will slowly build up your savings over time and even give them a head start when they reach adulthood!
It is crucial for teens to understand how to read their paychecks. Make sure you teach them how to read their paychecks and explain how taxes are calculated. You can even include them when you file your taxes so they can learn how to file their own!
Make sure your child understands the importance of having a budget. Keeping track of your income and spending is super important, and the earlier they get started on this habit, the easier it will be for them in the future. After all, we are living in the digital era, so it makes sense that we take advantage of the digital tools that we have these days. There are tons of apps and other tools on most smartphones that can help you keep better track of your money and spending, and even apps that can help you save money over time!
Instilling good financial habits in your children will help them understand money and finances better. It is important that we focus more on financial education for our youth because raising financially responsible kids will eventually turn them into financially stable adults!
Did you know that Service One has Certified Credit Union Financial Counselors to help you with any kind of financial advice! Our Financial Counselors can help with any stage of life, help you with how to budget or save, and can also provide credit score guidance. Give us a call at 270-796-8500 or stop by any branch to meet with a Certified Financial Counselor.